In today’s digital landscape, customers want to be spared from expensive upfront purchases. They want services that are simple, without the hassle of ownership and maintenance.
But how can companies address these demands and effectively put the customer at the center of their businesses? The Age of the Customer has brought a change in how businesses offer their products and services. Now, the focus must shift from offering products to offering the capabilities of products delivered as a service. Hence, XaaS, also known as Anything-as-a-Service, is on the rise.
Companies that jump into the servitization economy have even more to gain. The transition to servitization, or the selling of the use of products instead of the products themselves, not only makes a company more dynamic; it also opens new and more profitable opportunities:
XaaS gives businesses loyal clients.
For offerings not sold as a subscription, the consumer must make a repurchase decision each time. At that point, it is possible— and tempting—for the consumer to reconsider other options and not purchase again. But with the subscription model, it is simply easier for them to continue with the status quo for as long as your business delivers valuable outcomes.
XaaS provides recurring revenue.
In the XaaS business model, clients agree to pay a recurring fee for continuing access to your service offerings. You charge a monthly fee with a minimum term, during which you commit to maintaining the service. There must be a clear distinction, though, that not all companies that provide “services” are XaaS businesses. For example, an office cleaning service that offers $100 cleanings upon request is not a XaaS business — but an on-demand business that does not provide recurring revenue.
XaaS enables businesses to be predictive instead of reactive.
Thanks to the IoT, your installed base (through which you deliver your service) can provide you real-time operational insights into current operating status, keep you updated on upcoming maintenance needs, and flag unusual device behavior. This allows you to be proactive instead of merely reactive.
Nearly every product can be transformed into a service. And this goes for many, if not all, the industries out in the market. Businesses therefore should reinvent the game and embrace business models that customers desire – to effectively open new revenue streams.
Making such a monumental shift in their business model can be a daunting task for any business. In a lot of cases, it is more advisable to partner with a company that already knows the ins and outs of servitization. At TAASCOM, we enable companies to embark on a Business Model Transformation journey to join the Servitization Economy.
Ready to reinvent your business model? Contact us today!
